Taxpayers will bear the burden of footing an extra Sh2 billion in accrued interest for the government's failure to pay millers under a 2017 maize subsidy programme.
At the end of 2017, the State owed processors Sh2.3 billion, an amount that grew to Sh5 billion as at this year as principal and interest amount.
The government has so far paid only five millers Sh3 billion, with Sh2 billion outstanding for four companies.
Agriculture ministry had contracted nine millers to import and sell maize to the state under subsidy in order to lower the cost of flour that had hit a high of Sh150 for a two-kilo packet. Agriculture Principal Secretary Hamadi Boga said they’ve requisitioned the National Treasury for the funds to clear the debt.
“We’re waiting for the Exchequer [to release the funds] as the request was made last week,” the PS said in an interview yesterday.
Millers say delayed payment has had a huge financial implication on them as they had taken loans to ship in the produce and are paying bank interest on the advance.
The payments were to be completed at the end of 2017 when the contract between the state and millers came to an end.
Millers had to move to court in 2019 to force the government to pay them the outstanding cash, after the court ruling in their favour. The state also had to pay interest on the amount.
The government was to offer millers 1.7 million bags of maize as an exchange for the Sh2.3 billion owed to them in 2017 but the decision was later shelved under unclear circumstances.
The debt, in its third year, has almost paralysed activities in some factories as millers struggle to pay workers and meet other financial obligations.
Processors argue that their companies have been constrained because of challenges resulting from cash flow as the government holds onto their funds.
“We’ve been negotiating to no avail for the last two years. We’re facing serious financial challenges as we cannot buy enough stock for future use,” the millers say.